Saudi airports expected to undergo privatization by the end of 2017

General Authority Civil Aviation (GACA) president Abdul Hakeem Al-Tamimi has announced that Saudi Arabia plans to privatise all airports in the country by the end of 2017. The main reason for privatization is to improve passenger services, balance expenditure and increase profitability.

The privatized airports will be fully owned by Saudi Civil Aviation Holding and will go about doing this in 3 methods. These will be to:

Convert the airports into companies, sell minority stakes to the public and form a board of directors to manage the organisation.

Sign an agreement with a specialized company to operate and maintain the airport, however, “GACA will bear the cost of the airport expansion project and the company will share the revenue”, Mr Al-Tamimi said. This is the method used for the Jeddah King Abdulaziz International Airport.

Privatize airports through the build, operate, transfer (BOT) method, this will be used for the Madinah Prince Mohamad Bin Abdulaziz International Airport, Taif, Hail, Qassim and Yanbu.

According to Mr Al-Tamimi, the airport privatization will be completed in phases.

The Saudi Civil Aviation Holding plans to sell a minority stake of the King Khalid International Airport. Goldman Sachs has been hired to manage the sale, the first privatization of its’ kind in the Kingdom.

King Khalid airport facilitated 22.5 million passengers in 2016, a 0.9% year-on-year increase.

Saudi Arabia is planning to raise $200 billion through stake sales of assets such as airports in the next few years.

The government has previously awarded foreign firms the management of their terminals. In 2016, the Dublin Airport Authority (DAA) was contracted to manage Riyadh airport’s new terminal 5. In April this year, Singapore Changi Airport Group was contracted to operate the King Abdulaziz International Airport (KAIA)in Jeddah, for up to 20 years.

These are the first steps taken to lead all airports in the Kingdom to operation on a commercial level.

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